Big oil may improve fracking

Could increasing involvement by oil giants, such as ExxonMobil and Chevron, make it easier to resolve the fracking wars?

That’s one possible outcome as multinational energy companies continue to grab shares of the booming market for natural gas from shale, a diverse industry in which hundreds of operators work under a patchwork of state-by-state regulations.

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ExxonMobil — already the nation’s largest gas producer — closed this month on its latest move, a $1.69 billion purchase of two companies with access to 317,000 acres in Pennsylvania and other parts of the Marcellus Shale region. Chevron made two big deals in the Marcellus this year, buying Pennsylvania-based Atlas Energy for $3.58 billion in February before announcing last month that it was acquiring leases for 228,000 acres of the gas-rich region.

Some experts hope the companies will improve industry practices in the shale-gas game. The boom in unconventional gas extraction has brought complaints — exaggerated, the industry says — about spills, methane contamination of water supplies, discharges of fracking waste into rivers and streams and damage to rural roads by trucks heading to and from well sites.

“We should welcome larger operators into these unconventional plays, which were developed by the smaller independents,” former BP technology chief Tony Meggs said during a Massachusetts Institute of Technology webcast Thursday about the gas industry.

“Because of their greater resources, and actually their greater exposure, [large companies] are much more able and willing to set the highest standards,” said Meggs, responding to a question from POLITICO. Eventually, he said, “everything will rise to those levels.”

Reid Detchon, executive director of the Energy Future Coalition, said major companies, such as Exxon, could also help sway the industry should they choose to endorse tighter regulations that would boost public acceptance of shale-gas extraction.

“It’s one thing for Bobby Kennedy to say that this needs to be more closely regulated,” said Detchon, who is also vice president for energy and climate at the United Nations Foundation. “It’s another thing for ExxonMobil and Shell to be saying that. And I think the majors are going to show that kind of leadership.”

Others say it’s too soon to tell, and that even with the Exxon and Chevron acquisitions, the shale-gas industry will continue to feature myriad players — large, medium and small.

“It’s certainly not a crazy idea to think that as the industry consolidates, there may be greater opportunities to see greater uniformity develop in management practices,” said Mark Brownstein, deputy director of the energy program at the Environmental Defense Fund. On the other hand, he said, “I think it’s also fair to say that the industry will most likely continue to be diverse for some time to come.”

Also, size doesn’t necessarily matter.

“You can have small companies that perform well, and you can have big companies that perform well,” Brownstein said. “But the opposite is also true.”